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October 30, 2014

Calif. Sales Fall Due to Big Drops in REOs

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Calif. Sales Fall Due to Big Drops in REOs

Fewer distressed homes on the market are contributing to inventory shortages in California, the California Association of REALTORS® reports. 

CAR reported that its Pending Home Sales Index dropped 3.8 percent from May to June. Still, it was up 4.7 percent year-over-year. 

REOs made up 20.2 percent of the state’s pending home sales in June, which is a decline from 29.2 percent a year ago. All distressed properties -- which includes REOs, short sales, and others -- made up 42 percent of June’s pending sales. That’s down from 49.5 percent a year ago, CAR reports.

"Pending sales declined in June, partly due to a lack of housing supply -- especially in REO properties," says CAR President LeFrancis Arnold. "The shortage of REO inventory is also putting upward pressure on bank-owned home prices, with the median price of REO properties showing a double-digit year-over-year gain of 11 percent in June."

In recent weeks, California lawmakers and CAR have tried to stop “REO to rental” programs in the state, arguing that bulk sales of REOs to investors is unnecessary because REO inventories are already low and that home buyers in the state already are “competing with small investors and encountering multiple-offer scenarios."

Source: “Decline in REOs Blamed for Sagging California Home Sales,” Inman News (July 24, 2012) and “Calif. Lawmakers Try to Stop REO Bulk-Sales Program,” REALTOR® Magazine Daily News (May 21, 2012)

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